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Daily Reports @ WJR

WJR September 2012 Reports

September 28, 2012

There are a few individual stock stories to watch this morning. Blackberry-maker Research in Motion, which traders have pretty much considered Apple’s road-kill in recent months, surprised everyone by selling 7.4 million units last quarter. That should give RIMM some breathing room as they huff and puff their way toward developing next year’s new Blackberry 10. RIMM stock is higher by about 19% pre-market.

This morning, Finish Line reported 49 cents in profit, which was a nickel ahead of estimates, on a 12 percent rise in same store sales. Walgreen beat the 56 cent estimate by 7 cents, but same store sales, especially prescription drug sales, were disappointing.

Nike shares are looking to open about 2 percent lower on news of shrinking gross margins.

Coming up this morning is updated Consumer Confidence news from the University of Michigan and the Chicago Purchasing Managers Index.

France announced their new budget plan today. While Spain will focus on budget cuts, the French will impose a 75 percent tax on the rich, who will presumably be moving to Spain in the near future.

We’ll likely give back a chunk of yesterday’s gains at the open. Right now, adjusted for fair value, the S&P futures are lower by about 6½ points, the Dow futures are down 63, and the NASDAQ futures are about 10 points below fair value.

September 27, 2012

September is usually one of the most difficult months of the year for stock prices. With only two days left in the month, the good news is that the S&P 500 is higher by about 2 percent. The bad news is that it’s about 2 percent lower than it was five trading sessions ago. We’ll get back some of that decline at the open today. But there’s a lot of economic data on the way in about fifteen minutes that could derail the train.

At 8:30, three reports are expected to reflect an economy that is limping along, at best. Weekly Jobless Claims are expected to again check in at around 375,000. The final reading of second quarter Gross Domestic Product should be reaffirmed at a paltry 1.7 percent, and the Durable Goods Orders Report is expected to decline by 5 percent overall, but increase only two-tenths of a percent ex-transportation.

If you have a Sealy mattress and a Tempur-Pedic mattress, consider pushing them together before sleeping tonight. Tempur-Pedic is buying Sealy for $2.20 per share. Sealy stock is answering the alarm up 7½ percent this morning.

Things are relatively calm in Europe this morning. The Spanish Government will release a new budget shortly, which could light some fires, rather literally.

But in the meantime, oversea markets are nicely higher, as are our futures. Right now, adjusted for fair value, the S&P futures are higher by almost 8 points, the Dow futures are up 78, and the NASDAQ futures are about 12½ points above fair value.

September 26, 2012

Stock prices were still on their happy little glide-path upward yesterday, until they were hit in the >

Firstly, riots in Spain reminded everybody that the problems in Europe have been wallpapered, but not fixed. This morning, that situation is compounded by another Greek drama, there the Greek unions are sponsoring a 24 hour general strike that appears to be turning violent. Spanish bond yields are on the way higher once again, with the 10 year right around 6 percent. You might recall that 7 percent is the generally recognized “danger zone.”

Then, as if thing weren’t worrisome enough, Charles Plosser the Philadelphia Fed President, reminded everyone that QE3 might not work, and that the Fed might reverse course well before 2015. Certainly not an original thought, or something that reasonable people shouldn’t have realized already. However, those comments served as another sucker punch for the market, offsetting some good housing data announced earlier in the day.

At 10 this morning, the New Home Sales data for August is expected to tick up to an annualized level of 380,000.

Overseas markets are a mess, with Spain the worst of the bunch, down about 3 ½ percent. Our futures have been weakening most of the morning. They’re fairly flat now, but the trend isn’t promising.

Right now, adjusted for fair value, the S&P futures are down almost a point, the Dow futures are up 7, but the NASDAQ futures are about 2 points below fair value.

September 25, 2012

It looks like stocks will recoup yesterday’s modest losses early on today, as the market continues to hover right around that new highs it reached almost two weeks ago.

A couple of early movers this morning are Safeway, up about 2 percent and Caterpillar, down nearly 2 percent. Safeway is reportedly making a move to carry more health foods, and Caterpillar trimmed its 2015 guidance last night. This morning, automaker Tesla cut its 2012 sales estimate. Tesla shares are in reverse to the tune of about 10 percent pre-market.

Any meaningful economic recovery will likely require a recovery in housing. We’ll see how much housing prices recovered in July at 9 o’clock, with the release of the Case-Shiller survey (it evidently takes them a while to add up the numbers.) The survey of 20 major U.S. markets is expected to have risen nine-tenths of a percent from June and 1.2 percent year-over-year.

Consumer Confidence numbers for September from the Conference Board. Expect a recovery from the August slump to a level of 64.8.

Oil and gold are both higher after yesterday’s losses. Overseas markets paint a mixed picture, but our futures are thus far colored green.

Adjusted for fair value, the S&P futures are higher by nearly 3 points, the Dow futures are up 34 and the NASDAQ futures are almost 8 points above fair value.

September 24, 2012

It’s the beginning of the end for the third quarter of the year. With five trading days remaining in the quarter, all eyes will be on the watch for companies leaking out a press release giving us a heads-up that quarterly profit might not be up to snuff.

You may recall that second quarter results were good, but significantly fewer companies beat estimates than in quarters gone by. That slowdown in positive surprises is expected to continue this quarter. We’ve already gotten warnings from a fistful of companies, including Fridays lowered guidance from Rockwell Collins.

The good news of the morning comes from home builder Lennar. The quarterly profit of 40 cents easily beat the 28 cent estimate and is almost four times the quarterly profit from a year ago.

A big brawl among workers at a parts supplier in China may slowdown availability of the back plates for the new iphone.

And only 29 of the Dow Jones 30 Industrial stocks are included in the index this morning. Kraft is out. United Healthcare is in.

Asian markets were mixed, but Europe is mostly lower and we’ll have to dig out of a little hole this morning as well. Right now, adjusted for fair value, the S&P futures are down about 7 points, the Dow futures are down 52 and the NASDAQ futures are just about 11 points below fair value.

September 21, 2012

Just about all major markets overseas are higher today, lifted by the rumor that Spain will be waving the white flag as early as next week and applying for a full bailout from its European pals.

Also helping out, of course, is the retail release of the iphone5. Demand is high, although the grumbling has started over the “Apple maps” feature, which replaces the popular “Google maps” icon. Could be an issue for some displeased buyers who may not be able to find their way back to the Apple store for help.

Yesterday, Bank of America announced that they were ahead of schedule in their plan to shed employees. Spurred on by their success, they have promised to cut an additional 16,000 jobs by year end. Pre-market, Bank of America shares have regained the one percent they lost yesterday plus a little more.

Vivus shares have more than doubled over the past year. Vivus is bringing to market the first obesity-fighting drug that the FDA has approved in 13 years. This morning, we’re reminded that stocks, like life, do not travel on a linear curve. Vivus shares have lost about 11 percent of their weight pre-market on expected problems in getting marketing approval in Europe.

McDonalds, Lennox International and Texas Instruments have all announced dividend increases. And it looks like stock prices will increase once again at 9:30. Adjusted for fair value, the S&P futures are higher by almost 5 points, the Dow futures are up 48 and the NASDAQ futures are just about 8½ points above fair value.

September 19, 2012

It started with the European Central Bank. Then Ben Bernanke brought out the economic bazooka last week. Overnight, not to be outdone, the Bank of Japan piled on, expanding their asset buying program. It’s generally acknowledged that when you invest, you shouldn’t fight the Fed. That fight becomes even tougher when ALL central banks move in the same direction with monetary policy. So, whether it’s good long-term policy or not, stock prices are heading higher on the news.

Ben Bernanke meets with the Senate Finance Committee today, but it’s a private meeting. No public Q&A session. No opportunity for grandstanding politicians. Maybe all of their meetings should be held this way.

Mortgage originations fell last week, but blame a quirk in the calendar rather than demand. The average rate on a 30 year loan fell to 3.72 percent, which is an all-time low.

Housing starts data and existing home data are on the way as the nationwide housing picture appears to be on a modest upswing.

Overseas markets are mixed, but mainly higher. The star is Japan, on the BOJ action, which is up more than one percent. We should head higher at the open as well, but not by much. Adjusted for fair value, the S&P futures are higher by almost 2 points, the Dow futures are up 30 and the NASDAQ futures are just about 4½ points above fair value.

September 18, 2012

A couple of stocks will get roughed up at the open this morning. Actually, the damage started in the after-hours last night for computer chip maker AMD. AMD’s CFO said see you later last night, and when CFO’s depart for no apparent reason, traders shoot first and aim later. AMD shares lost about 7 percent in the after-hours session last night.

This morning, FedEx beat their lowered earnings forecast for the first quarter by a nickel per share. That was the extent of the good news. FedEx blamed a slowing world-wide outlook for what came next. They lowered their second quarter profit outlook too $1.37 from $1.67 and dropped the full year forecast to about $6.40 from $7.03. FedEx shares are following up a one percent loss yesterday with a nearly 2 percent loss this morning.

At 10 o’clock, the National Association of Home Builders will release the results of their latest member survey. This is one of the few indicators that has been trending up for the past four months. Expect a September number of 38 versus the August reading of 37.

Just about all markets overseas were lower overnight, but pretty much all by less than one percent. Our futures are pointing just slightly lower at this hour. Adjusted for fair value, the S&P futures are down a little more than 3 points, the Dow futures are down 32 and the NASDAQ futures are just about 7 points below fair value.

September 17, 2012

Well, it’s the one-year anniversary of “Occupy Wall Street” today, and will be celebrated with a reunion of many of those who squatted at Zucotti Park last year. The plan for the day appears to be an attempt to surround the New York Stock Exchange and disrupt traffic. Hard to believe that those folks haven’t been able to find jobs over the past 52 weeks.

President Obama will reportedly file a complaint against the Chinese Government’s policy of protectionism, protecting its own automotive industry. It’s interesting that some of these things only become objectionable within a couple months of an election. By total coincidence, the President will announce his protest in the auto-heavy state political swing-state of Ohio.

Another survey of manufacturers comes at 8:30 this morning. This one is the Empire survey of New York state companies. It’s expected to improve from the rather ugly August level of -5.85. Still, most expect a negative number, say around minus 2 points for September.

A lot of Asian markets did not trade overnight. However, most overseas markets are moderately lower after last week’s big rally. We should head a little lower at 9:30 as well. Adjusted for fair value, the S&P futures are down about 3 points, the Dow futures are down 19 and the NASDAQ futures are just about a point below fair value.

September 14, 2012

Holy cow.

Ben Bernanke and his pals at the Federal Reserve unveiled the economic equivalent of a “shock and awe” campaign yesterday. In launching an open-ended 40 billion dollar per month agency bond buying program, the Fed left no doubt s. In trying to rescue this struggling economy from infective economic policy, they will do everything they CAN. The big structural question is “are they doing what they SHOULD?”

Keeping interest rates depressed to infinity and beyond is kind of like a natural gas leak that continues to build. There’s no inflation right now. But if inflation sparks, that kind of atmosphere could be explosive. In the meantime, if you’re hiding out in money markets and cash – well let’s just say that the good news is that you won’t be paying much tax on THAT amount of interest income.

We’ll get a bunch of economic reports between now and 10 o’clock. Speaking of inflation, or the lack thereof, the August Consumer Price Index rolls at 8:30. Expect a six-tenths of a percent increase on higher energy costs. By the way, oil has breached the 100 per barrel level again earlier this morning.

Also on the way are August Retail Sales, Industrial Production and the University of Michigan’s preliminary view of September Consumer Sentiment. Expect a reading there of 74, down slightly from August.

Adjusted for fair value, the S&P futures are up about 4 points, the Dow futures are up 43 and the NASDAQ futures are just almost 12 points above fair value.

September 13, 2012

It’s Fed decision day. That is traditionally the kind of day in which you’ll see stocks trade in a fairly narrow band and remain pretty much unchanged until we hear what Ben Bernanke has to say at 2:15. The actual interest rate adjustment announcement comes at 12:30 and that is expected to be no change at all, if for no other reason than it’s difficult to adjust interest rates below zero. However, additional policy loosening IS expected this time around due to the weak economy. Perhaps the Fed will promise zero-percent rates through 2014 or 2015 or twenty-terninty. We shall see.

We did see the new iphone 5 yesterday, and Apple should be an interesting stock to watch today. The new phone does appear to be very pretty, and it does handle 4G service. However, there wasn’t any big surprise, or any “one more thing” in yesterday’s announcement that could really energize the stock price. So far pre-market, Apple shares are not quite one percent higher.

In about 9 minutes Weekly Unemployment Claims are expected to hang out at the stubborn and disappointing level of 370,000 once again. We’ll also hear about August Producer Prices, which are expected to shoot up 1.4 percent on a sharp rise in food and energy costs.

Overseas markets are mixed. Our futures look pretty weak on their >

September 12, 2012

The big news of the morning came from Germany and the news is good if you are long the euro, long stocks, gold, silver or oil. The German Constitutional Court refused to throw a monkey wrench into the developing machinery of the European Rescue Mechanism. They did put a ceiling on the level of Germany’s exposure, but it’s kind of like the suspended ceiling in your basement. It can always be raised in an emergency.

And, at long last, today we should hear about the device that you’d think was about to save mankind. Yes, the new Apple iphone 5 will probably be unveiled today, so get in a long line to fork over another 500 bucks or so. It’s a lot more fun than standing in line at the unemployment office, anyway.

A retail research firm predicts that Holiday sales will be up 3.3 percent this coming season. That’s a little lower than 2011’s 3.7% increase, but still pretty strong considering the condition of an economy that’s growing at less than 2 percent.

The Fed starts a two-day meeting today. Import Prices and the Wholesale Inventory Report are on the way, but Europe and Apple are driving the bus in the early going.

Just about everybody overseas is higher, and we’ll likely meander north at 9:30 as well, although the futures are off their earlier highs. Right now, adjusted for fair value, the S&P futures are up about 3 points, the Dow futures are up 16 and the NASDAQ futures, on Apple speculation, are about 8 points above fair value.

September 11, 2012

There’s nothing to get excited about on the economic agenda today, but the potential explosives lie in wait starting tomorrow.

The announcement of the grand plan for European rescue sparked a market rally last week. That plan, known as the European Stability Mechanism is heavily reliant on Germany’s participation. Tomorrow, an eight member court in Germany, the Federal Constitutional Court, will rule on whether Germany CAN participate. An adverse ruling on the ESM by the FCC wouldn’t be fatal to the ESM, or the S&P, or any other three-letter acronym you can dream up, but it sure wouldn’t help

Small business owners in this country have been in a pretty sour mood this year. But this morning, the National Federation of Small Business survey on business optimism actually ticked up 1.7 points to a level of 92.9. That’s the first improvement we’ve seen in three months.

One economist estimates that the release of Apple’s iphone 5 could increase fourth quarter national GDP by a quarter to a half percent. Makes you wonder what would happen if someone came up with an innovation people really NEEDED. Oh, the priorities of the American consumer.

Overseas stocks are mainly lower, but our futures are pointing modestly higher. Right now, adjusted for fair value, the S&P futures are up a little more than 3 points, the Dow futures are up 33 and the NASDAQ futures are about 5½ points above fair value.

September 10, 2012

This coming Thursday, the Federal Reserve Open Market Committee will make its next move (or non-move) in their ongoing effort to depreciate the U.S. dollar. Odds are that they’ll strive to keep up with their money-printing counterparts overseas. Just how they will do that is the multi-trillion dollar question.

The big data point that they may use to justify further monetary easing is last Friday’s Employment Report, which was an absolute stinker.

Yes, the unemployment rate declined from 8.3 percent to 8.1 percent. But that’s only because almost four times as many Americans stopped LOOKING for work as those who found new non-farm employment. Moreover, the jobs that WERE created in this country last month were non-manufacturing jobs, and in the long run, it sure would be helpful if we could start making things again.

Shareholders in Michael Kors have been making money this year, as the stock has more than doubled, and what better time to come to market with an additional 20 million shares, which is exactly what Michael Kors announced they’ll be putting on sale.

And the Government is selling another chuck of its holdings in AIG. The proposed sale will make the taxpayers a minority shareholder, but could bring the Government’s net out of pocket down to about 6 billion bucks, as it looks like we’ll eventually turn a profit on that one.

Asian stock rose overnight, but Europe has turned mixed and our futures are lower. Right now, adjusted for fair value, the S&P futures are down about 2 points, the Dow futures are down 25 and the NASDAQ futures are about 7 points below fair value.

September 7, 2012

Okay, let’s review.

Stocks staged a huge rally yesterday after the European Central Bank unveiled an open-ended bond buying program. They did that not because things are great in Europe. They did that because things are a mess. Chinese stocks rose about 4 percent overnight on the announcement of new fiscal stimulus. Once again, it is stimulus born of weakness, not strength.

At 8:30 this morning, we’ll get the Monthly Employment Report from the Labor Department. The consensus estimate is that 125,000 new non-farm jobs were created in August, but the range of estimates goes from 70,000 to 170,000. This is another case where stock prices might rally on bad news and back off on good news. A report of less than 100,000 may be interpreted as so weak that the Federal Reserve will ease monetary policy more aggressively. The unemployment rate is expected to hold steady at the rather ugly level of 8.3 percent.

Smith and Wesson may be the stock of the morning. The gun maker is indicated more than 20 percent higher pre-market, after raising their earnings guidance last night. Intel shares will start lower, after cutting their revenue outlook this morning.

Nothing but green arrows overseas. Our futures ae positive, but way off their highs of the morning. Right now, adjusted for fair value, the S&P futures are up about 5 points, the Dow futures are up 32 and the NASDAQ futures are about a point above fair value.

September 6, 2012

The focal point for traders is once again situated on the East side of the Atlantic Ocean. About a half hour ago the European Central Bank decided to hold their short-term interest rate steady at three-quarters of one percent. But the main event comes at 8:30 this morning, with Mario Draghi’s press conference. Rumor has it that he will flesh out the plan behind his promise to “do whatever it takes” to save the current European Union and currency.

For its part, the Bank of England also sat still on interest rates this morning.

There is an interesting report out this morning form the World Economic Forum. Every year they rank the competitiveness of 144 economies across the globe. The good news is that the United States ranks as the seventh most-competitive economy world-wide. The bad news is that last year we were fifth. Might not be the change we need.

Shares of Verifone should change to a higher price today after a better than expected earnings report last night. Supervalu stores should also catch a bid after announcing a cost cutting program that will close 60 stores nationwide.

Malaysian stocks were a little lower overnight, but every other overseas market that is open is higher. Right now, adjusted for fair value, the S&P futures are up about 8 points, the Dow futures are up 77 and the NASDAQ futures are 14 points above fair value.

September 5, 2012

The futures are relatively quiet again this morning, and we may be on the way to another relatively sleepy day. The only report on the economic docket is the 8:30 reading on second quarter productivity, which is not exactly the kind of information likely to stir the animal spirit.

Traders will likely await tomorrow’s expected announcement from the European Central Bank. The hope is that they will unveil a new strategy to deal with all the sovereign debt issues. Then, of course, on Friday we’ll get the monthly Employment Report from the Labor Department.

In the meantime, FedEx shares were a few percent lower in European trade this morning after FedEx lowered their quarterly profit estimate to about $1.40 per share from $1.52. Facebook shares are actually a little higher this morning (and you sure don’t see that every day.) CEO Mark Zuckerberg promised that he won’t dump any of his shares for at least a year, which I suppose is some sort of vote of confidence. Facebook also said that it won’t sell stock to pay a 2 billion dollar tax bill.

Dollar General beat estimates by a nickel, although sales were generally a few dollars short of expectations.

Asian markets lost ground overnight, but Europe is now narrowly mixed. Our futures are pointing to a slightly higher open. Right now, adjusted for fair value, the S&P futures up 2 points, the Dow futures are up 23 although the NASDAQ futures are just about a point below fair value.

September 4, 2012

Stock prices extended their gains to three months in a row in August, although last week was one of the sleepiest weeks of the year.

Not to rouse a good sleep, our futures are fairly flat this morning as we await this week’s potentially significant economic data. That starts at 10 o’clock this morning, with the July Construction Spending Report and, perhaps more importantly, the August ISM manufacturing Index. A reading below 50 indicates contraction in manufacturing activity. The July reading was 49.8. Most expect a reading of just a bit over 50 for August.

Campbell Soup earned 41 cents in their fourth quarter. That was two cents better than expected. On the famous other hand, Smithfield Foods missed the 44 cent estimate by four cents.

ConAgra gets an upgrade this morning, while General Mills was downgraded by a major brokerage house.

Overseas markets are generally lower, although our futures have just turned a wee bit higher. Right now, adjusted for fair value, the S&P futures are flat, the Dow futures are up 7 and NASDAQ futures are just about even with fair value.

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